New Jersey Executives Say State Must Work Harder to be Business Friendly

HOLMDEL – The Third Annual New Jersey Economic Policy Forum in December drew 150 business and academic leaders committed to the advocacy of a business-friendly state. The event focused on the findings of the initiative’s latest C-Suite Survey of top-level executives in the state.

The New Jersey State Chamber of Commerce, Rutgers University, commercial real estate services provider Cushman & Wakefield, Inc. and several partner trade associations created the Forum in 2007 to unite key stakeholders to discuss economic challenges and opportunities. Since then, the survey has been conducted five times by the Edward J. Bloustein School of Planning and Public Policy at Rutgers. It asks questions associated with the state’s economy and business climate.

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“Beginning with the first C-Suite Survey in fall 2007, we have tracked executive perceptions and realities through the economy’s downward spiral,” said James W. Hughes, dean of the Bloustein School. “During 2008 and 2009, we saw the direst economic forecast realized. The good news is that those years are history, the GDP has begun to expand, the nation’s economic output is on a positive trajectory, and unemployment growth has slowed.”

How do the 101 executive respondents to the fifth C-Suite Survey (C-Suite V) think the economy is faring? “The majority believes that both the nation’s and New Jersey’s economies are performing in the fair/poor category,” noted Joseph J. Seneca, a professor at the Edward J. Bloustein School. “Most think we are still in an economic recession, though a growing percentage sees things as getting better.”

The respondents commented on the impact of the recession on their businesses:
• 57.4 percent have laid off employees.
• 38.7 percent have reduced wages.
• 26.7 percent have reduced hours.
• 72.4 percent reported decreased profits over the first half of 2009.

“The outlook for 2010 is better,” Seneca said. “C-Suite V shows that 63.7 percent of respondents expect to see revenue growth in 2010.”

New Jersey’s Challenges
C-Suite V respondents’ ratings of New Jersey show deterioration. The findings reflect that more than 88 percent of participants rate the state fair/poor as both a place to do business and to expand. “At the same time, C-Suite V shows some improvement in anticipated capital spending in New Jersey over C-Suite III in fall 2008,” Seneca noted. “The respondents to C-Suite V also reported modest gains in New Jersey-based employment, as compared to C-Suite III.”

During the coming 12 months, 15.2 percent plan to add New Jersey employees, vs. 12.7 percent in C-Suite III. For non-New Jersey-based jobs, 34.4 percent responded that they will increase employees. “This last figure is troublesome,” Seneca said. “The executives we surveyed indicated they will increase employment outside New Jersey at double the rate planned for inside the state.”

Regarding commercial real estate, 30.3 percent of respondents also said that they expect their companies to decrease their space utilization in New Jersey; 5.1 percent expect to increase space utilization. These figures represent the largest and smallest percentages, respectively, in the history of the C-Suite Survey.

“We view these numbers as indicative of a cost reduction trend rather than an exodus from the state,” noted Ken McCarthy, managing director of research at Cushman & Wakefield. “The depth of the recession means many companies have lean staffing, which may well translate to stronger employment growth as we recover.”

Still, C-Suite V points to both taxes and the state’s regulatory climate as disadvantages for attracting and retaining corporate tenants, according to Seneca. “We need to put forth a renewed concentration on reversing the burdensome costs of doing business in New Jersey,” he said. “On a positive note, 30 percent of C-Suite V respondents report that the state’s government has become more responsive to the needs of the business community. This represents a 10.2 percent increase since C-Suite IV in spring 2009.

“New Jersey’s strong fundamentals – location, infrastructure and real estate inventory –will play as an advantage as the economic recovery takes hold and government continues to make positive policy adjustments,” McCarthy said. “Retaining and building upon our corporate tenant base will be critical to our future economic health.”